IAB research reveals that, in contrast to the most recent wave of high-valuation startups, direct brands are focusing on profitability and customer satisfaction ahead of market share. In fact, 90 percent of DTC brands report that they are already profitable.The findings indicate that the vast majority of disruptor brands are building institutions to last, with only 15 percent citing that being acquired is a long-term goal. The number one long-term goal? Going global (34%). Today, 78 percent of their sales can be attributed to the U.S.
Other key takeaways from the study include:
- Incumbent brands are not considered key competition. Direct to Consumer brands, by a two-to-one margin, consider e-commerce giants like Amazon and Wayfair—as well as other DTC companies—as their biggest competitors
- Direct brands report that the average time to achieve profitability occurs within three years
- More than three-quarters of Founders say they get product to market in six months or less—and a third can do it in two months
- The leading investment in human resources: customer services. The most challenging roles to fill? Marketing and advertising
- Nearly one third state that establishing a new category (31%) and/or opening brick-and-mortar locations (30%) rank high as long-term goals
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